Italy WiMax Auction Sets Record

The auction of 35 licenses will raise a European WiMax record of €136.3 million (US$205.8 million) for the Italian government, Communications Minister Paolo Gentiloni announced Thursday. The ninth round of bidding concluded Wednesday, with bids showing a 176 percent increase on the starting offers, the minister said.

The biggest winner in the auction was the relatively little-known AriaDSL SpA, which secured licenses in all Italian regions for a total of €47.5 million, the Communications Ministry said. The company is reportedly controlled by Israeli billionaire David Gilo, founder of Vyyo, a Norcross, Georgia, company selling equipment for wireless high-speed data connections to businesses and homes.

The second-biggest spender was AFT SpA, a company providing WiFi hotspots around Italy, which paid €34.4 million for licenses in all Italian regions. The former telecom incumbent Telecom Italia snapped up licenses in central and southern Italy for a more modest €13.8 million. Former Prime Minister Silvio Berlusconi's Mediaset media group, Wind and Fastweb were among the major players to pull out before the end of the auction.

The auction of the WiMax (Worldwide Interoperability for Microwave Access) 3.5GHz radio frequencies, previously used for military communications, is intended to combat the digital divide in Italy and encourage the entry of smaller companies into the telecom market. The technology, which delivers speeds of 3M bits to 5M bits per second for downloads and 1M bits to 1.5M bits for uploads, is considered ideal for bringing mobile broadband communications to remote rural and mountainous areas.

Some 4.2 million Italians, or 7.5 percent of the total population, are still cut off from broadband Internet access, according to the Communications Ministry. The terms of the WiMax auction obliged bidders to explain their plans for introducing the technology to the country's Internet black spots.

"The market geography to emerge from this auction is extremely positive, because it shows we have competition, a significant number of players and sizeable investments," Gentiloni told reporters in Rome. "The conclusion of the WiMax auction is a milestone on the road to the removal of the digital divide and to guaranteeing access to high-speed Internet as the new universal service of the 21st century," he said.

WiMax auctions in France and Germany recently raised €125.8 million and €56.1 million, respectively. Italy's licenses run for 15 years and are renewable, but cannot be sold without Communications Ministry approval.